Consumer prices are expected to rise in the first quarter of 2013, according to a study by China's central bank. Photo: Reuters

An increasing number of mainland bankers expect further monetary easing by the central bank in the first quarter of next year in order to foster economic growth, a survey by the People's Bank of China showed yesterday.

According to the survey, conducted by the PBOC and the National Bureau of Statistics on bankers nationwide in the present quarter, 19.8 per cent of the respondents said they expected monetary policy to ease in the first quarter of next year, up from 5.9 per cent in the previous survey in the third quarter.

Seventy-five per cent of the bankers said the central bank's policy stance was appropriate, compared to 72.5 per cent in the previous quarter.

The central bank is likely to ease its monetary policy through reserve requirement ratio cuts, said Australia and New Zealand Banking Group senior economist Raymond Yeung, who is expecting a 1.5 percentage point cut by the end of next year.

The reserve requirement ratio for larger mainland banks is currently set at 20 per cent after a 0.5 percentage point cut in May.

The central government had set the tone in maintaining stable economic growth and proactive fiscal policy after the two-day central economic work conference over the weekend, Yeung said. "Further monetary easing is needed to achieve the government's growth target."

Shenyin Wanguo Securities analyst Qu Qing said in a research report that the central bank would slash reserve requirements or extend the maturity of reverse repo to stabilise short-term money supply. A reverse repo is the purchase of a security, usually government debt, tied to an agreement to sell back later.

The reserve requirement ratio was likely to be cut between February and April, he wrote.

Both Yeung and Qu believe an interest rate cut is unlikely because of concerns over inflation.

Consumer prices were widely expected to rise in the first quarter of 2013, another PBOC survey, which interviewed 20,000 depositors in 50 cities, showed yesterday. Some 41.7 per cent of the respondents said they expected higher consumer prices in the first quarter of next year, 4.7 percentage points higher than in the third-quarter survey. Meanwhile, 58.5 per cent said consumer prices were unacceptably high.

Yeung said inflation would hit 4 per cent by next year's end.

This article appeared in the South China Morning Post print edition as Expectations rise for policy easing: survey